PNB shares plunge 14% after Q4 loss, Jefferies suggests bailout

17/05/2018

The bank, which has been allowed by the Reserve Bank of India (RBI) to spread the fraud-related provisions over four quarters, said it would set aside the remaining money over the three quarters beginning 1 April.

The stock tanked to a fresh 52-week low of Rs 74.30 on BSE and is now at Rs 75.50, down 12.2% from its previous close. The bank made payments to the tune of almost Rs 6600 crore to other banks to whom it owed money on underwriting commitments with regard to the letters of undertakings that were fraudulently issued to the Nirav Modi group.

After filing chargesheet in the Nirav Modi bank fraud case, the CBI on Wednesday filed its second chargesheet against billionaire jeweller Mehul Choksi and 17 other entities, including companies owned by him and other individuals, in connection with the over $2 billion Punjab National Bank (PNB) scam.

Looking at the bank's Q4 earnings, financial services company Jeferries said in a report that "the need for a bailout by the government is immediate".

PNB shares plunge 14% after Q4 loss, Jefferies suggests bailout

On the fraud front, the bank said the matter is under investigation. Ananthasubramanian was earlier with the PNB.

"After including outstanding amounts under other credit facilities to the above entities, the amount involved now works out to be Rs 14,356.84 crore", PNB said. In the quarter ended March 2017, the bank had posted a net profit of Rs 262 crore.

The bank's fourth-quarter losses were largely incurred by having to set aside funds to pay the other banks for the illegal guarantees.

The quarterly loss of Rs 13,416 crore was attributed mainly to higher provisioning particularly to account for bad assets rising more than three-fold from Rs 4,910.39 crore to Rs 16,202.82 crore. In a document dated May 10, Kartik Radia, Partner & Head - Business Advisory Services at BDO, declared that the three companies Firestar Diamond Inc, A. Jaffe Inc and Fantasy Inc that have filed for bankruptcy in NY received at least around $46 million (Rs 312.4 crore) in remittances from PNB since 2011, the time when Modi's fraudulent activities are believed to have commenced.

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